American Adds Gates and Routes in LA, Targets the Hollywood Crowd

When American first started to build up Los Angeles, before the merger with US Airways, I thought it was crazy. There was too much competition in the market, and it wasn’t worth fighting for. Once the new management team came in with the merger, I figured this nonsense would end. I was wrong; the growth didn’t stop. LA continues to be a focus for the airline, and yesterday, American piled on with more gates, more routes, and more sponsorships.

This time, American is really going for the Hollywood crowd. It’s not the routes that make that clear, so much, but rather the community partnerships. The event yesterday wasn’t held at LAX as usual. It was held at the Hollywood Bowl, where American also revealed it was now the official airline of the facility. It’s also now partnering with The Hollywood Reporter.

The event itself was really fascinating to observe. There were no celebrities at the event (unless you count a couple of Clipper Spirit dancers). There were, however, representatives from studios, music labels, and large agencies being wooed by the sales team.

Was this important? I’d say so considering how many people American trucked in for this and the employee townhall the day before. There were at least a couple SVPs there (Andrew Nocella, SVP and Chief Marketing Officer and Kerry Philipovitch, SVP of Customer Experience). There were VPs as well including marketing, network planning, customer planning, and more. Throw on top some managing directors and the turnout was impressive. This wasn’t just management though. They made a point to also bring flight attendants, mechanics, and customer service too.

To me the point was clear. American is getting even more serious about LA. It’s going to keep growing its flights and it’s going to improve its facilities the best it can.

New Gates and Routes
As you probably know, American’s facility situation is not good. It has Terminal 4 for its mainline operations as well as a few gates in Terminal 6. It has recently started pushing some flights from the Bradley Terminal next door. In addition, it has its Eagle remote terminal (buses, bleh) for the large and increasing regional operation. This is all over the map, and now American is adding another 20 flights a day to the mix. How the heck is that going to work?

For starters, American is physically adding two gates to Terminal 4. If you’re wondering how the airline is managing this magic trick, it’s thanks to the changing aircraft being used in LA. There are very few if any 757s and 767s in the market still, and those require bigger parking spots. With A321s taking over much of that flying, American can now shrink the footprint for its gates. So, one gate will be added on the east side with the jet bridge coming in near the food truck in the rotunda. Then another gate will be added along the back of the rotunda.

If you think this is going to make overcrowded Terminal 4 even worse, you’re right. But American is ripping out the existing seating and putting in a different design which will increase seating capacity.

Further, the behind security connector between the Bradley Terminal and Terminal 4 will be opening in just a couple short months. That will make it much easier to use gates over there when needed.

That’s how American is going to handle this new flying. The destinations themselves are interesting too. American is finally adding long-rumored Seattle and Portland to the map. I can’t imagine Alaska is happy about that, but then again, Alaska flies routes like Seattle to DFW and Chicago. It’s just flying between the hubs that will help them both in the end.

Looking at other markets like Anchorage (seasonal), Minneapolis, Kansas City, New Orleans, Omaha, and Hartford (a market which was cut not too long ago), you can see a pattern of American slowly trying to blanket every city it can find. And the seasonal markets of Durango, Jackson Hole, Montrose, and Vail… well that will make the Hollywood crowd happy.

I still can’t believe all this service makes sense, but then again with oil prices as low as they are, a lot of stuff can make sense. I spoke with a lot of people at this event, people who know the numbers and who I trust. They say LA really is performing well and they want to keep growing. Go figure.

This brings us back to the sponsorships, which are a key part of trying to grow a deeper connection with the community. It makes American more than just an airline that flies to the nearest airport. If the airline is set on building LA, then I think it’s smart to pursue this community strategy.

Delta learned long ago that this worked. And it started to develop good relationships in Hollywood once it began investing in the LA market a few years back. American apparently agrees because it’s going down the same path.

And United? Well United in LA is the subject of a different post I need to write. It’s just not making the same commitment. Sure the airline is the official airline of the Oscars, but United tries to turn that into a Chicago thing. Every year, it flies the statues out from Chicago where they’re made. And if you look at United’s partner page, it shows larger sponsorships in its hubs. LA isn’t even listed.

American and Delta appear to be interested in building up flying at all costs in LA, and that means trying to win hearts and minds. As a traveler who lives in the area, this can only mean good things. I love overcapacity and fare wars. But I still just can’t wrap my head around both of these guys becoming “LA’s hometown airline.” It’s gonna be a heck of a fight.

This is a straight-up question, and not snark. How do “community partnerships” like the ones you mentioned make any practical difference? I’ve probably seen hundreds of “XYZ, the official airline of ABC” ads in my life, and I can’t remember any one of them. Does this sort of endorsement really drive other people’s purchasing decisions? Why?

I’d also bet that there is a bit of a attempt to borrow a brand halo, even if they’re just getting a smidge of the halo’s light from far far away. Oh, American is the partner airline of my favorite non-profit, I like them 0.0024% better now. Is more subconscious.

That being said, I’ven’t watched an episode of Oprah in a long long time, but I know that American was the official airline partner. (Chicago there of course.)

I thought of this yesterday during a corporate event held Invesco Field’s “United Club Level” – which carries the same signage and branding as the airports’ United Clubs, wondering if any Broncos club level members were ever persuaded into wandering into an airport United Club. Or vice versa.

grichard – Well, different partnerships have different impacts. Some of these Hollywood partnerships can come with benefits, like getting celebs to show up at things that the airline sponsors. And we all know celebs can have an impact on decisions for some people. Other sponsorships are just about creating a brand halo. Doing good in the community helps engender a positive feeling. It may or may not have a direct impact that’s measurable, but I think part of an understanding that companies should make an effort to be socially responsible in one way or another. That can also have a big impact with employees. But I’d be curious myself to know how they measure effectiveness.

All the discussion on FlyerTalk and the like (from posters there who normally know what they’re talking about) indicates that this was originally supposed to be the announcement of LAX-HKG, but that that got delayed for some reason.

My understanding (again, just from what I read) of the reason they can add gates to Terminal 4 is as much that most or all widebody operations will move to AA’s new preferential-use gates in TBIT once the airside connector is open as much as cutting the number of widebody flights; do you know if that’s correct.

Alex Hill – As mentioned it’s primarily because of the near disappearance of the 757 and 767. Widebody ops will still use T4 (not exclusively) and they’re going to reopen the customs/immigration facility there.

LAX-HKG delay is probably over gate space. All the new flights are a smaller plane, wouldn’t be surprised if many were AE flights. LAX-HKG would require a larger gate and T4 only has so many of those. Depending on timing they may be able to get a TBIT gate but even those are in short supply as even TBIT based carriers are still being sent out to the remote stands on the westside.

Looking at the press release, I find it curious they separate “Seasonal Destinations” and “Summer Schedules”. I get that they’re probably flying to DRO during the winter, but I’d gander ANC is a a summer operation. Why not just lump it all into Seasonal Schedules or something like that?

Why do you think the LA traffic is not worth fighting for? Is it because with no dominant carrier, nobody is able to establish a fare premium, and therefore all the competition is for lower-fare traffic?

LAX is perhaps the single market in the US with the most premium demand. Competition certainly prevents any one carrier from dominating, but you don’t need to dominate to make a profit, particularly when there’s so much premium traffic to fight over or share. The fact that four airlines operate lie-flat business/first class seats on LAX-NYC says a lot about the premium demand.

I wouldn’t be shocked if the US management thought like Cranky does: that LAX should be dismantled. But managing PHX, PHL, and CLT as your premier hubs (two of which are impenetrable fortress hubs) is a different world than LAX and NYC. It seems to me (from the outside) that once the US management actually saw the numbers from the LAX hub, they realized that old AA management wasn’t crazy at all to build up LAX.

Dan – My original thinking back in the day was that there would be some big important routes (like LAX-JFK) where American should focus. But the smaller cities? Leave that to the others who were already fighting it out. It would never be profitable. Since that time, United has essentially given up in many ways, so that helps. Plus, oil has plunged. In talking to the AA folks today, they say that when AA made its big push into these mid-tier markets before the merger, the numbers looked horrendous. But soon after the merger, things really started to pick up. (This wasn’t a merger-related change, just related to length of time in the market I guess.) Either way, I just figured these dog fights never result in good profitable operations. But apparently I’m wrong.

Brett,
AA didn’t start building up LAX shortly before the US merger…they’ve been building it up since mid-late 1990s. TW had a fairly sizable operation in T3 at the time of the merger. The current T4 was renovated in 2001. In the September 2009 restructuring announcement LAX was designated a cornerstone (read hub) as before it was officially only a focus city.

As for AA learning from DL about Hollywood partnerships? You realize basically all the major studios fly AA. I enjoy your posts here but IMO you are slightly off on the history here.

On your last point, I don’t follow. I’m not talking about corporate contracts. I’m talking about public-facing Hollywood sponsorships like The Hollywood Reporter and the Hollywood Bowl. It’s a different strategy.

Cranky, does AA have a choice? UA has SFO and DL has SEA on the West Coast. AA has neither; they have PHX, but that’s not going to be a premium O&D hub. Arguably, SEA isn’t a premium O&D hub either, which is why DL is also building up LAX. UA, by comparison, really puts its premium traffic in SFO and captures Silicon Valley international traffic.

BigDaddyJ – Sure, AA can serve the west coast via Phoenix if you’re talking about the need for a hub. LA should be primarily for LA origin and destination passengers. That being said, the Pacific build-up hasn’t been bad so far. Auckland and Sydney make sense with the Qantas joint venture and stuff like that you can never get to work in Phoenix. So there’s a balance.

I agree with Nick on O/D vs. hub. That’s why I don’t think international connections will be much of an issue. Cathay and JAL connections to much of the interior and east coast are probably better served through ORD and JFK, and Qantas is already flowing a lot of their connecting traffic through DFW instead of LAX. They’ve also hinted fairly strongly that they’ll be adding MEL-DFW and BNE-DFW once they start taking delivery of their 787s, which should further decrease the load at LAX.

I’m not sure where this idea that LAX should be primarily for O&D passengers came from. An airport with lots of O&D service is a good place for a hub. All these trans-Pacific flights aren’t going to be filled with O&D passengers, they will need domestic feed. If PHX is the main western domestic hub, then people will have to double connect.

Jim – An airport with a lot of O&D traffic is great for a hub… if you have the room for it. But AA is constrained at LAX to some extent, and it’s only not constrained further because it has settled for a disjointed customer experience.

LAX is fine as a connecting point for Asian partner airlines, but many of these flights won’t do that at all.

The big problem with LAX as a hub is its location. Being so far south, flights from Asia are several hundred miles longer than those to SEA or SFO, which works out to about an extra hour of flying time (for which you have to carry extra fuel all the way across the Pacific, of course). Connecting through LAX from most of the US actually requires quite a deviation from the ideal direct line. For a lot of the south-east, it’s actually shorter to fly via ORD to Asia than to go via the west coast. LAX is really only a good hub for connections between Asia and South America, and those are limited by the lack of visa-free transit in the US.

Most foreign carriers serve LAX because it has strong O/D demand, not because it’s a particularly good hub. Add on issues with space constraints and the generally unpleasant airport experience, and I’m sure most people would rather connect elsewhere. Look at the success of Qantas’s SYD-DFW route, for instance.

I wonder what happened to adding Guangzhou? Gerald Arpey mentioned it ages ago with LAX-HKG as possibilities. The Qantas JV promises two new routes soon, maybe LAX-BNE? The 77W would be perfect for that route.

Brett, was there any comment at the event about what you were thinking may happen with terminal reshuffling after DL supposedly consolidates at T2 & T3? I’m guessing it’s early for AA to publicly discuss possibly consolidating at T4 & T5 but, still, curious.

I also wonder if they might kept the regional terminal even if they did take over T5 if their goal truly is to grow.

Marcus – Nothing on the record. But I can tell you that American would love to get out of the Eagle terminal if it can get a facility that doesn’t require busing. It wants to improve the experience as best it can. There are just a lot of constraints at LAX.

It seems like they are dumping capacity in some well served markets like Portland, Seattle, and MSP. I’m surprised that they are giving Bradley another go since it hasn’t seemed to work out for anyone yet. But, with fuel cheap I guess they don’t need to fill a plane with high fares to make money.

All of this is kind of fascinating to the airliner crowd. Marketing, branding, what have you.

I would think every airline has given a lot of thought trying to market or brand this or that, but you wonder, and maybe it is really an exercise in futility. Every customer has different histories, experiences.

Ask your customers to think of what we now call the legacies, and to think back to what we used to call the trunk airlines (if they have any idea what they were): American, Delta, and United; Braniff, Continental, Western, and TWA; Eastern and National.

Dear customer, when I mention an airline, is there one or a couple of cities you associate that airline with? Is there an aircraft you associate it with? Is there one, or maybe a couple of people you always associate it with? I’m sure the answers tell you a lot, good and bad!)

An East Coaster, now into his Medicare years, Los Angeles and Hollywood will forever be associated with first, TWA, and second, Continental. The idea of flying to LAX on a luxurious TWA Super Constellation (I never did it, but), and Howard Hughes, now that was Hollywood. Bob Six, and his Boeing Jets, came later, but that was a poor second. UA was always San Fran and Denver. DL, of course, Atlanta. But, I can never quite associate CO with what I thought of as UA (I still gag at those UA planes’ tails!) Or NW, as being anything associated with DL. (There isn’t anything I like about thinking of NW as DL, or vice versa.) And then, AA and TW, or America West and USAir. (Having me think of flying Allegheny into LAX, as AA, is just beyond the pale for me.)

But then, I’m just old, and pretty hopeless, I guess! And, LAX isn’t and never will be my hometown airport.

An aside, am I the only one to think of Eastern Airlines as Eddie Rickenbacker, Frank Borman, Frank Lorenzo, and Donald Trump? Whatever happened to those guys?

I’m not in my Medicare years yet, but I’m old enough to have fond memories of flying Northwest 747s from DTW to Asia via the hub at NRT. Some of them are still around, of course, but somehow it’s not the same on Delta.

AA will be taking over T5 from Delta. This should be announced soon, surprised it hasn’t been. It will replace the Eagle remote gates. AA also isn’t reducing wide body ops at LAX. That is a baseless statement. This May there will be 6x daily 763 to Dallas. Miami will have three 763s, a 772 and a 77W. Chicago will have a 788 and a 763. Not to mention AA has more long-hauls than ever before. AA can add the gates because international ops are consolidating to TBIT, and the connected walkway opens in late February.

I think the reduction in widebodies Cranky was referring to is the retirement of the AA 762s, which happened a couple years ago now. LAX-JFK used to be all 762s and is now all A321s.

I have no idea if there have been enough upgauges to widebodies on DFW, ORD, and MIA as well as additional long haul service (PVG, GRU, SYD, AKL, HKG apparently soon-to-be-announced, and HND, though NRT may go away before long after that starts) to offset that loss. Given all the new widebody service, I doubt Cranky’s repeated statement that AA is flying fewer widebodies out of LAX than they were a few years ago, but he seems pretty sure of it. More relevant to gate space, with widebodies now handling more long haul and not handling the regular, spread-throughout-the-day JFK flights, I doubt AA can afford a net reduction of widebody gates whether or not there’s a slight reduction in the raw number of widebody flights.

Your email address will not be published. Required fields are marked *

Comment

Name *

Email *

Website

Please type "969bcf":

Leave this field empty please:

Continue the conversation via emailGet only replies to your comment, the best of the rest, as well as a daily recap of all comments on this post. No more than a few emails daily, which you can reply to/unsubscribe from directly from your inbox.